“Our cost cutting plan requires transferring work activity from the stores to our finance function shared services centers. But they have no spare capacity. Somehow, we have to increase productivity in these centers to receive the work.” The SVP was describing the retailer’s need to unlock capacity by increasing operational efficiency.
The company maintained internal lean management teams. In past years they launched lean shared services efforts. But these minor gains had stalled. Technology was recently upgraded to best-in-class levels. This delivered no spare capacity.
Non-technology, self-funding operational
improvement implementation:
– No new technology
– End-to-end improvement
– 6-month implementation
Management selected The Lab to rapidly implement non-technology improvements. The goal: increase employee productivity within 6 months and begin receiving work from the stores. The Lab’s process improvement templates made it possible. They converted shared service operations into a standardized, highly productive “knowledge work factory.” Without new technology.
The retailer, one of the world’s largest, maintains stores in 50 countries. Global shared services centers are concentrated in North America, South America and Europe. Within the U.S., 3,000 shared services employees support retail operations.
The implementation began with a 7-week, Phase I analysis of U.S. shared services operations. It documented business processes to pinpoint improvements and best practices. Phase I delivered a self-funding, guaranteed business case and work plan to launch the Phase II implementation.
– Increased productivity
– Improved lean management
– Create knowledge work factories
– Accounts payable
– Accounts receivable
– Health & wellness
– Inventory management
– Procurement
– Payroll
– Accounting services
The Lab identified and implemented over 200 non-technology, shared services operations best practices. Examples:
Upgraded Capacity Models — The client used standard activity times to monitor productivity. But their standards and capacity models were inaccurate and impossible to reconcile. The Lab upgraded the client capacity models with its activity cube. In three weeks, it reconciled capacity and volumes to increase accuracy. Daily productivity reports tracked individual employee performance.
Reduced NIGO — High volumes of inbound invoices, purchase orders and payments arrived “not in good order” or NIGO. These required costly manual rework. Half of this NIGO resulted from vague, inconsistent or non-existent submission guidelines to vendors. The Lab implemented a simple “guidelines inventory” that reduced inbound NIGO reprocessing volume by half within three months.
Centralized Invoice Research — Invoices that required research were handled individually and documented informally by shared services employees. Consequently, a single vendor might have scores or hundreds of invoices individually researched. The result: unnoticed, avoidable, redundant research. The Lab standardized the research process and centralized it within small teams. Research contact points between teams eliminated 80 percent of redundant research and rework.
